WPP 2021 Preliminary Results
WPP reported strong preliminary 2021 results, with revenue reaching £12.8 billion, up 6.7% year-over-year, and a remarkable organic growth rate of 13.3%. Operating profit rose to £1.5 billion, with a headline operating margin of 14.4%. The company returned over £1 billion to shareholders through dividends and share buybacks, and guided for further growth in 2022. Notably, WPP won $8.7 billion in net new business, including major accounts like Coca-Cola. The strong demand for digital services and ecommerce underpinned its performance, positioning WPP for continued success in a booming advertising market.
- Revenue increased to £12.8 billion, up 6.7% from 2020.
- Organic revenue growth reached 13.3%.
- Operating profit rose to £1.5 billion, with a headline operating margin of 14.4%.
- Returned over £1 billion to shareholders through dividends and share buybacks.
- Achieved net new business wins of $8.7 billion, including Coca-Cola.
- Strong cash flow of £1.3 billion.
- Reported loss before tax of £951 million, compared to a loss of £2.8 billion in 2020.
- Adjusted net debt increased to £0.9 billion, reflecting share buyback costs.
Very strong growth driven by demand for digital services, ecommerce and technology; exceptional new business performance; over
Key figures – continuing operations
£ million |
2021 |
+/(-)%
|
+/(-)% LFL2 |
20203 |
||||
Revenue |
12,801 |
6.7 |
13.3 |
12,003 |
||||
Revenue less pass-through costs |
10,397 |
6.5 |
12.1 |
9,762 |
||||
|
|
|
|
|
||||
Reported: |
|
|
|
|
||||
Operating profit/(loss) |
1,229 |
n/m |
- |
(2,278) |
||||
Profit/(loss) before tax |
951 |
n/m |
|
(2,791) |
||||
Diluted EPS (p) |
52.5 |
n/m |
- |
(243.0) |
||||
Dividends per share (p) |
31.2 |
30.0 |
- |
24.0 |
||||
|
|
|
|
|
||||
Headline4: |
|
|
|
|
||||
Operating profit |
1,494 |
18.5 |
26.8 |
1,261 |
||||
Operating profit margin |
|
1.5pt* |
1.7pt* |
|
||||
Profit before tax |
1,365 |
31.1 |
- |
1,041 |
||||
Diluted EPS (p) |
78.5 |
30.6 |
- |
60.1 |
||||
* Margin points |
Full year and Q4 financial highlights
-
FY continuing operations reported revenue +
6.7% , LFL revenue +13.3% -
FY LFL revenue less pass-through costs +
12.1% ; Q4 +10.8% -
2-year FY LFL revenue less pass-through costs +
2.9% ; Q4 +3.6% -
Q4 LFL revenue less pass-through costs by major market: US +
11.7% ,UK +9.9% ,Germany +3.4% ,Greater China +13.6% ,Australia -2.2% -
FY headline operating margin
14.4% , up 1.7pt LFL on prior year with strong top-line growth and efficiency savings supporting significant reinvestment in incentives -
Reported diluted EPS
52.5 pence ; headline diluted EPS up30.6% to78.5 pence -
Free cash flow of
£1.3 billion -
Adjusted net debt at
31 December 2021 £0.9 billion , after significant growth investments and shareholder returns, reflecting very strong cash generation
Strategic progress, shareholder returns and 2022 guidance
-
Improving business mix: growth areas of experience, commerce and technology around
38% of revenue less pass-through costs in Global Integrated Agencies ex GroupM -
GroupM very strong: 2021 LFL revenue less pass-through costs +
16.1% -
Continued investment in client offer: creation of Choreograph, acquisitions including
Sard Verbinnen , Satalia, Cloud Commerce and Numerator (Kantar ) -
Breadth and depth of capabilities resonating well with clients: market-leading
$8.7 billion - Strong recognition of creativity and effectiveness: most awarded company at the 2021 Cannes Lions Festival; ranked number one across all three WARC rankings for media, creative and effectiveness
-
Transformation programme on track: around
£245 million gross savings, mainly in property, procurement and simplification; good progress on shared services and IT transformation -
Final dividend of
18.7 pence proposed, up33.6% ; over£1 billion returned to shareholders in 2021 through share buybacks and dividends -
2022 guidance: LFL revenue less pass-through costs growth around
5% ; headline operating margin up around 50 bps; trade working capital expected to be flat year-on-year;£800 million share buyback, of which£129 million already completed; tax rate of around25.5% in 2022
“It has been an outstanding year for
“As clients seek to accelerate their growth and transform how they reach customers, the depth, breadth and global scale of our offer - which combines creativity with technology and data, through Choreograph, and the largest global media platform in GroupM - is proving its value for existing and new clients. The talent, dynamism and commitment of our people have also shone through. Our extensive partnership with The Coca-Cola Company, the expansion of our work with
“We have made substantial strategic progress, creating the world’s leading board-level communications firm through the merger of Finsbury Glover Hering and
“We look forward to 2022 with confidence. We are guiding to strong top-line growth, improving profitability and continued investment in our people and services.”
To access
Overview and strategic progress
Market environment
2021 was an extraordinary year for the global advertising industry. Growth in spend was supported by a stronger-than-expected macroeconomic environment, a consumption boost from pent-up saving and structural growth in digital channels. According to GroupM estimates, global advertising spend6 grew by
The pace of growth in digital advertising has continued to accelerate, reflecting the seismic shift in the way people consume media. GroupM estimates that global digital advertising spend grew by
Within digital, one of the big drivers of growth has been the explosion in ecommerce. The pandemic accelerated a widespread shift towards shopping online, amplifying the number of opportunities for brands to connect to consumers on digital channels, while also levelling the playing field for challenger brands. GroupM estimates that global retail ecommerce advanced
Two other factors are playing a significant role in the growth in advertising spend. New, app-based or digital-first businesses are able to afford to invest a greater proportion of their income into marketing to grow scale fast because they lack the physical presence (and associated costs such as rent) of traditional businesses. In turn, more traditional advertisers such as consumer packaged goods companies are investing in retail and commerce media – engaging with customers closer to the digital point of sale. This is blurring the lines between the marketing budget and the sales promotion budget, significantly growing the addressable market for marketing services businesses.
By geography, the
We have seen the acceleration of two significant trends, in data and purpose, that we expect to continue. The shift to digital and omnichannel commerce is driving companies to increase investment in data-driven marketing, which requires better (and privacy-compliant) customer data as well as marketing technology transformation. We are also witnessing very strong demand for strategic advice on purpose, sustainability and broader social issues.
Performance and progress
Revenue was
We have seen an exceptional recovery in the year, with LFL growth in revenue less pass-through costs across all our business sectors and major markets. On a two-year basis we are
Clients and partners
By sector, we have had continued momentum in technology, healthcare & pharma and consumer packaged goods which together represent
We won
We are proud to have been appointed The Coca-Cola Company’s Global Marketing Network Partner. This is a partnership of unprecedented scale in the industry – covering creative, media and data across more than 200 countries and territories – and reflects the breadth and reach of
We continued to deepen and broaden our relationships with established and emerging technology partners globally, to build our expertise and develop leading services for clients. For example, we are a Global Partner with
Creativity
Underpinning our success this year is the strength of our creative work. We were honoured to be recognised as the most-awarded company at the 2021 Cannes Lions Festival, with winners representing 38 different countries. Each of our global integrated creative agencies won a
The metaverse presents a new frontier of creative opportunities for brands to engage with consumers, through virtual worlds connecting gaming, augmented and virtual reality, NFTs and the blockchain. Clients are seizing the opportunity and seeking our partnership to experiment in ways to bring experiences to life in this new channel. Our agencies are already delivering metaverse projects for clients including Wendy’s, Under Armour and Pfizer. To take the ideas to the next level, Hogarth recently announced the launch of The Metaverse Foundry, a global team of over 700 creatives, producers, visual artists and technologists focused on delivering the most creative and compelling metaverse experiences for our clients.
Investments for growth
During the year we made a number of acquisitions, including Satalia, a market-leading artificial intelligence business;
These acquisitions are aligned with our accelerated growth strategy and focused M&A approach to build on existing capabilities in growth areas. For example, Satalia’s highly specialised artificial intelligence capabilities have been leveraged across
We also stepped up organic investment to drive significant long-term growth opportunities. The main areas of focus for this investment are the formation and development of Choreograph to unify and accelerate our data capabilities, the creation of a commerce-as-a-service platform to complement our broader expertise in commerce, and further innovation in our market-leading programmatic and connected TV businesses, Xaxis and Finecast.
Choreograph is working to design innovative ways to future-proof our clients’ approach to data. We believe there will not be a single solution to addressing the challenges presented by the deprecation of third-party cookies and other identifiers. As such we are exploring and investing in multiple privacy-preserving solutions including machine learning graphs, identity networks, cohort analysis and the use of contextual signals. Choreograph has already played a central role in the retention of the Unilever media account and the Coca-Cola partnership.
Transformation programme
Good progress has been made on our transformation programme, designed to simplify
The transformation of our property estate continues, despite the constraints of COVID, with a further nine campuses opened in 2021, taking the total to 30. We aim to complete at least 65 campuses, housing more than 85,000 people, by 2025. In procurement, we are beginning to consolidate our spend more effectively, improving terms for our agencies with our purchasing scale. Telecoms savings and software licenses were areas of significant efficiency in 2021. In terms of simplification, the combination of sub-scale agencies in smaller markets is leading to a significant improvement in performance; we have removed around 500 legal entities from the group structure, with a similar figure targeted for 2022; and we have acquired the minorities in
Across IT, Finance and HR transformation, significant groundwork has been undertaken as we modernise and move to a more standardised approach, with target operating models approved for all three. In IT, transformation plans including network infrastructure, cloud acceleration and platform rationalisation are all on track. The shared services programme is progressing, with a significant portion of finance processes migrated from the
Purpose and ESG
WPP’s purpose is to use the power of creativity to build better futures for our people, our planet, our clients and our communities. We outlined our sustainability strategy at an ESG event for stakeholders in
People
Our success is powered by our people. This year we have launched and developed a number of initiatives across our agencies to foster an open and inclusive culture. The pilot of our Inclusive Leadership in a
As part of our commitment to ensure the best possible culture, we also launched our Mental Health Allies programme, providing mental health training to 500 leaders, HR professionals and employees across the
With the support of our first company-wide LGBTQ+ community, WPP Unite, we developed the LGBTQ+ Inclusive Marketing programme, to equip our people with the knowledge, skills and resources to ensure more inclusive marketing. WPP Unite was spearheaded in the
We continue to focus on driving greater gender balance throughout the company with women now representing more than half of our senior managers and, at the most senior level of our company, women now make up
We know we have more to do to ensure
To help lower the barriers to entry into the creative industry we launched our second NextGen Leaders series. Built with inclusion at its core, this cohort comprised 1,400 participants (
As part of our Racial Equity Programme, in
In addition,
Planet
Earlier in the year we made an industry-leading commitment to reduce carbon emissions from our own operations to net zero by 2025 and across our supply chain by 2030, including media buying – an industry first. Supporting this we have committed to equally ambitious carbon emission reduction targets in line with climate science, and validated by the Science Based Targets initiative, to reduce our absolute Scope 1 and 2 emissions by at least
In
Engaging with rating agencies and benchmarking organisations is key to holding ourselves accountable for our progress. We are delighted that the
Clients
We have supported many of our clients with their own sustainability goals. For example, we helped to design the world’s first carbon-neutral TV (Sky), designed and created an immersive experience on the plastic crisis in our oceans (SC Johnson) and launched an AI-powered campaign supporting local businesses across
Communities
In partnership with the
Outlook for 2022
Our guidance for 2022 is as follows:
-
Like-for-like revenue less pass-through costs growth of around
5% - Headline operating margin improvement of around 50 bps, excluding the impacts of M&A and foreign exchange
-
Effective tax rate (measured as headline tax as a % of headline profit before tax) of around
25.5% -
Capex
£350 -400 million, with around£100 million relating to ERP system deployment previously included in capex guidance now included in restructuring costs - Trade working capital expected to be flat year-on-year
-
Current foreign exchange rates imply around a
0.5% drag on reported revenue less pass-through costs from the movement in sterling year-on-year -
We also anticipate mergers and acquisitions will add 0.5
-1.0% to revenue less pass-through costs growth -
Given our low leverage and continued strong cash generation, we expect to execute around
£800 million of share buybacks in 2022, of which£129 million has already been completed
Medium-term guidance
At our Capital Markets Day in
-
3
-4% annual growth in revenue less pass-through costs from 2023, including M&A benefit of 0.5-1.0% annually -
15.5
-16.0% headline operating margin in 2023 -
Dividend: intention to grow annually with a pay-out ratio around
40% of headline diluted EPS - Average adjusted net debt/EBITDA maintained in the range 1.5-1.75x
Financial results
Unaudited headline income statement:
£ million |
2021 |
20209 |
+/(-) %
|
+/(-) %
|
||||
Continuing operations |
|
|
|
|
||||
Revenue |
12,801 |
12,003 |
6.7 |
13.3 |
||||
Revenue less pass-through costs |
10,397 |
9,762 |
6.5 |
12.1 |
||||
Operating profit |
1,494 |
1,261 |
18.5 |
26.8 |
||||
Operating profit margin % |
|
|
1.5pt |
1.7pt |
||||
Income from associates |
86 |
10 |
n/m |
|
||||
PBIT |
1,580 |
1,271 |
24.3 |
|
||||
Net finance costs |
(215) |
(230) |
(6.6) |
|
||||
Profit before tax |
1,365 |
1,041 |
31.1 |
|
||||
Tax |
(328) |
(240) |
36.7 |
|
||||
Profit after tax |
1,037 |
801 |
29.5 |
|
||||
Non-controlling interests |
(83) |
(59) |
40.9 |
|
||||
Profit attributable to shareholders |
954 |
742 |
28.6 |
|
||||
Diluted EPS |
78.5p |
60.1p |
30.6 |
|
Reconciliation of operating profit/(loss) to headline operating profit:
£ million |
2021 |
2020 |
||
Continuing operations |
|
|
||
Operating profit/(loss) |
1,229 |
(2,278) |
||
Amortisation and impairment of acquired intangible assets |
98 |
89 |
||
|
2 |
2,823 |
||
Losses/(gains) on disposal of investments and subsidiaries |
11 |
(8) |
||
Gains on remeasurement of equity interests arising from a change in scope of ownership |
- |
(1) |
||
Investment and other impairment (reversals)/charges |
(43) |
296 |
||
Litigation settlement |
21 |
26 |
||
Restructuring and transformation costs |
146 |
81 |
||
Restructuring costs in relation to COVID-19 |
30 |
233 |
||
Headline operating profit |
1,494 |
1,261 |
Reported billings were
Reported revenue from continuing operations was up
Like-for-like revenue growth for 2021, excluding the impact of currency, acquisitions and disposals, and the other adjustments, was
Reported revenue less pass-through costs was up
Regional review
Revenue analysis
£ million |
2021 |
2020 |
+/(-) %
|
+/(-) %
|
||||||
|
4,494 |
4,465 |
0.7 |
9.4 |
||||||
|
1,867 |
1,637 |
14.0 |
15.0 |
||||||
W. Cont Europe |
2,786 |
2,442 |
14.1 |
19.2 |
||||||
AP, LA, AME, CEE11 |
3,654 |
3,459 |
5.6 |
13.3 |
||||||
|
12,801 |
12,003 |
6.7 |
13.3 |
Revenue less pass-through costs analysis
£ million |
2021 |
2020 |
+/(-) %
|
+/(-) %
|
||||||
|
3,849 |
3,744 |
2.8 |
9.7 |
||||||
|
1,414 |
1,234 |
14.6 |
15.0 |
||||||
W. Cont Europe |
2,226 |
2,019 |
10.2 |
14.5 |
||||||
AP, LA, AME, CEE |
2,908 |
2,765 |
5.2 |
12.3 |
||||||
|
10,397 |
9,762 |
6.5 |
12.1 |
Headline operating profit analysis
£ million |
2021 |
% margin* |
2020 |
% margin* |
||||
|
656 |
17.0 |
612 |
16.3 |
||||
|
181 |
12.8 |
138 |
11.2 |
||||
W Cont. |
289 |
13.0 |
199 |
9.8 |
||||
AP, LA, AME, CEE |
368 |
12.7 |
312 |
11.3 |
||||
|
1,494 |
14.4 |
1,261 |
12.9 |
||||
* Headline operating profit as a percentage of revenue less pass-through costs |
||||||||
Western Continental Europe like-for-like revenue less pass-through costs was up
In
Business sector review
During 2020, we announced that we would bring together Grey and AKQA under the
Revenue analysis
£ million |
2021 |
2020 |
+/(-) %
|
+/(-) %
|
||||||
Global Integrated Agencies |
10,836 |
10,266 |
5.6 |
12.6 |
||||||
Public Relations |
959 |
893 |
7.4 |
12.6 |
||||||
Specialist Agencies |
1,006 |
844 |
19.1 |
22.5 |
||||||
|
12,801 |
12,003 |
6.7 |
13.3 |
Revenue less pass-through costs analysis
£ million |
2021 |
2020 |
+/(-) %
|
+/(-) %
|
||||||
Global Integrated Agencies |
8,638 |
8,194 |
5.4 |
11.3 |
||||||
Public Relations |
910 |
854 |
6.5 |
11.5 |
||||||
Specialist Agencies |
849 |
714 |
19.0 |
21.8 |
||||||
|
10,397 |
9,762 |
6.5 |
12.1 |
Headline operating profit analysis
£ million |
2021 |
% margin* |
2020 |
% margin* |
||||
Global Int. Agencies |
1,216 |
14.1 |
1,060 |
12.9 |
||||
Public Relations |
143 |
15.7 |
142 |
16.5 |
||||
Specialist Agencies |
135 |
15.9 |
59 |
8.3 |
||||
|
1,494 |
14.4 |
1,261 |
12.9 |
||||
* Headline operating profit as a percentage of revenue less pass-through costs |
||||||||
Global Integrated Agencies like-for-like revenue less pass-through costs was up
Public Relations like-for-like revenue less pass-through costs was up
Specialist Agencies like-for-like revenue less pass-through costs was up
Operating profitability
Reported profit before tax was
Reported profit after tax was
Headline EBITDA (including IFRS 16 depreciation) for 2021 was up
Headline operating margin was up 150 basis points to
The Group’s headline operating margin is after charging
The average number of people in the Group in 2021 was 104,808 compared to 102,822 in 2020. The total number of people at
Exceptional items
The Group incurred a net exceptional loss of
Interest and taxes
Net finance costs (excluding the revaluation and retranslation of financial instruments) were
The reported tax charge was
Earnings and dividend
Headline profit before tax was up
Reported diluted earnings per share were
The Board is proposing a final dividend for 2021 of
Further details of WPP’s financial performance are provided in Appendix 1.
Cash flow highlights
Twelve months ended (£ million) |
31 December
|
31 December
|
||
Operating profit/(loss) of continuing and discontinued operations |
1,229 |
(2,267) |
||
Depreciation and amortisation |
542 |
631 |
||
Investment and other impairment (reversals)/charges |
(1) |
3,316 |
||
Lease payments (inc interest) |
(409) |
(399) |
||
Non-cash compensation |
100 |
74 |
||
Net interest paid |
(126) |
(100) |
||
Tax paid |
(391) |
(372) |
||
Capex |
(293) |
(273) |
||
Earnout payments |
(57) |
(115) |
||
Other |
(31) |
(50) |
||
Trade working capital |
319 |
780 |
||
Other receivables, payables and provisions |
383 |
58 |
||
Free cash flow |
1,265 |
1,283 |
||
Disposal proceeds |
77 |
284 |
||
Net initial acquisition payments |
(464) |
(144) |
||
Dividends |
(315) |
(122) |
||
Share repurchases and buybacks |
(819) |
(290) |
||
Net cash flow |
(256) |
1,011 |
In 2021, net cash outflow was
Balance sheet highlights
As at
During the year, we converted the majority of our cash pool arrangements to zero-balancing cash pools, whereby the cash and overdrafts within these cash pools are physically swept to the header accounts on a daily basis, resulting in a reduction of the large gross cash and overdraft positions at
The average adjusted net debt to EBITDA ratio in the 12 months to
A summary of the Group’s unaudited balance sheet and notes as at
| ________________________________ |
| 1 Percentage change in reported sterling. |
| 2 Like-for-like. LFL comparisons are calculated as follows: current year, constant currency actual results (which include acquisitions from the relevant date of completion) are compared with prior year, constant currency actual results, adjusted to reflect the results of acquisitions and disposals and the reclassification of certain businesses to associates in 2021 and the reassessment of agency arrangements under IFRS 15 for the commensurate period in the prior year. |
| 3 Figures have been restated as described in the accounting policies in Appendix 1. |
| 4 In this press release not all of the figures and ratios used are readily available from the unaudited preliminary results included in Appendix 1. Management believes these non-GAAP measures, including constant currency and like-for-like growth, revenue less pass-through costs and headline profit measures, are both useful and necessary to better understand the Group’s results. Where required, details of how these have been arrived at are shown in Appendix 2. |
| 5 Billings, as defined in the glossary on page 45. |
| 6 All references to estimates and forecasts for advertising spend exclude US political advertising |
| 7 Generation Z: Building a Better Normal, Wunderman Thompson Intelligence, |
| 8 Kantar Purpose 2020 Report |
| 9 Figures have been restated as described in the accounting policies in Appendix 1. |
| 10 Certain businesses were reclassified to associates as the Group no longer controls them. In addition, certain media billings recognised as revenue earlier in the year have been re-assessed under IFRS 15: “Revenue from Contracts with Customers” and have been excluded from revenue, but have no impact on revenue less pass-through costs. There are no adjustments to previously reported revenue in the first three quarters of 2021 or the 2020 financial year. |
| 11 |
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